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MoviePass owner Helios and Matheson could see its shares fall if it’s delisted

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MoviePass CEO Mitch Lowe and Helios and Matheson Chief Executive Ted Farnsworth.Mitch Lowe, CEO of MoviePass, and Ted Farnsworth, CEO of parent company Helios and Matheson, in happier times. The latter company could see its stock delisted by the Nasdaq within days.MoviePass/Reuters
  • MoviePass’s parent company, Helios and Matheson, is in danger of having its stock delisted by the Nasdaq within weeks. 
  • The company has failed to meet a key listing standard — its shares have traded below $1 a share for most of the last seven months. 
  • If Nasdaq delisted the stock, it would trade in the over-the-counter markets.
  • That could lead the stock to fall even farther in value and could make it hard for investors and the company to sell shares.
  • Helios and Matheson could delay the delisting by appealing it or getting a six-month extension to boost its stock.

As bad as this year has been for shareholders of Helios and Matheson, the parent company of MoviePass, things could soon get even worse.

The company’s stock is in danger of being delisted by the Nasdaq national market, potentially as soon as December 28. If and when that happens, its stock could plunge even farther than it already has, and shareholders could have a tough time selling their shares.

Worse, the company could find it difficult to raise new funds by selling additional shares — the chief way it’s kept itself in business this year amid mounting losses. 

“The delisting itself is clearly bad news,” said James Angel, an associate professor of finance at Georgetown University’s McDonough School of Business. 

Representatives of Helios and Matheson did not respond to an email seeking comment about the potential delisting.

Helios and Matheson has been trading below $1 a share

Helios and Matheson shareholders have already absorbed a bunch of bad news this year. MoviePass’ $10-a-month subscription service, which initially excited investors and boosted the company’s stock, proved to be a boondoggle. In just the first nine months of this year, Helios and Matheson has burned through $321 million in cash from its operations alone, almost entirely due to MoviePass. It’s kept afloat by issuing and selling billions of new shares to the public, in the process massively diluting its investor base — and sinking its stock price. 

The Nasdaq requires that all listed companies and their stocks meet certain requirements, among them that they trade over $1 a share. Thanks to Helios and Matheson’s massive stock sales, its shares fell below that threshold in May and, with a brief respite after a reverse split in July, have stayed below it since. The company repeatedly warned investors that Nasdaq had given it until this past Tuesday to get back into compliance. 

On Wednesday, according to a document Helios and Matheson filed Friday with the Securities and Exchange Commission, the Nasdaq warned the company it would suspend trading in its stock on December 28 and would move to delist it. Helios and Matheson said it would appeal the decision, which would put the delisting process on hold until the Nasdaq hears its appeal, and could potentially avert the stock’s removal if the company wins. 

But its prospects of prevailing in the appeal, which is slated to be held within 45 days of the company officially filing for one, look dubious. The Nasdaq already denied the company a second 180-day period to get its stock above $1 a share. The market’s staff said they didn’t think it was possible for Helios and Matheson to do that. 

Read this: MoviePass’s parent company is in dire danger of having its stock delisted by the Nasdaq

That would leave the company’s stock trading in the over-the-counter markets. Although investors could still buy and still shares, such a move could prove disastrous for the company.

“Very few companies come back from delisting,” said Kevin Mak, director of the real-time analysis and investment lab at Stanford’s Graduate School of Business. 

Its stock could take a further hit if it gets delisted

Companies that get delisted from major exchanges often see an immediate drop in their stock value, market experts said. With its stock trading lately at less than 2 cents a share, it might seem that Helios and Matheson has nowhere left to fall. But some stocks in the over-the-counter markets are trading for as little as 0.01 cents a share, Angel noted, so it could have plenty of room left to fall. 

Part of the reason why stocks that are delisted see an immediate share price decline is that many institutional investors aren’t permitted to own stocks that aren’t on the major exchanges, said Mak. If the Nasdaq does drop Helios and Matheson’s stock, it could force mutual funds, pension funds and other big investors that still hold its shares to dump their investments, he said. 

“It’s generally going to be something that’s going to cause them to sell,” he said. 

Another problem for companies whose stocks trade over the counter — and their investors — is that their shares can be harder to buy and sell. It’s not just that many institutional investors can’t trade such stocks, it’s that many individual investors avoid over-the-counter markets as well. Because stocks that trade over-the-counter aren’t subject to any exchange’s listing requirements and have often ended up there because they don’t meet those requirements, they’re generally considered to be riskier investments.

Investors can still generally trade relatively small quantities of shares in the over-the-counter markets without too much trouble, the market experts said. But it can be much more difficult to buy and sell mass quantities, they said. 

“You’re less likely to find a counterparty if you want to trade,” said Christine Parlour, a finance professor at the Haas School of Business at the University of California, Berkeley. 

Helios and Matheson has depended on selling shares

Relatedly, the costs of trades made in the over-the-counter markets tend to be significantly higher than in the big national markets. The difference between the bid and ask prices for stocks listed on the big national markets tend to be a few pennies, or a small percentage of their share prices. The gap tends to be much bigger for over-the-counter stocks. 

What that means is that buyers tend to have to pay more for shares than they would otherwise, and sellers tend to have to sell them for considerably less. 

Such consequences of delisting could be particularly problematic for Helios and Matheson. The company had just $4.9 million in cash at the end of September, and burned through more than $100 million in cash in the third quarter despite trying numerous times to revamp its service to stanch its losses. 

Typically if companies to fail to meet a listing standard after the 180-day period the Nasdaq gives them to come back into compliance, the market will send them a letter warning them they the don’t meet the standard. Companies generally have four days to disclose such letters to shareholders. 

The Nasdaq is able to offer companies a second 180-day period to get back into compliance with its listing standards. But it typically offers that extension only to companies that meet all of its other requirements except the one they’ve been notified about.

The company does have a strategy to avoid being delisted

In addition to having its stock fall below the $1 threshold, Helios and Matheson has failed since August to meet another key standard — having a board composed of a majority of independent directors and an audit committee composed of at least three independent directors.

However, the company has nominated attorney Joseph Fried to serve as a director. Should he be elected at the company’s meeting later this month, he would bring Helios and Matheson back into compliance on those board requirements. 

The company has been planning to try to get back into compliance with the $1 a share listing requirement by reverse splitting its stock, in effect trading one new share for two to hundreds of older shares. But it cancelled a planned shareholder vote on a potential reverse-split plan last month in the face of widespread shareholder opposition.

Helios and Matheson already reverse-split its stock once this year, in July. The company’s stock stayed above $1 a share for less than a week, though, falling dramatically as the company resumed issuing and selling massive numbers of new shares

In its regulatory document warning of the Nasdaq’s delisting decision, Helios and Matheson said if the market gave it more time to get its stock above $1 a share, it would try again to get approval for a reverse split. It also said it would “continue considering all available options to resolve the company’s noncompliance” with the standard.

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The 3 Best Canadian Tech Stocks I Would Buy With $3,000 for 2021

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The majority of the Canadian tech stocks went through the roof in 2020 and delivered outsized returns. However, tech stocks witnessed sharp selling in the past 10 days, reflecting valuation concerns and expected normalization in demand. 

As these high-growth tech stocks shed some of their gains, I believe it’s time to accumulate them at current price levels to outperform the broader markets by a significant margin in 2021. Let’s dive into three tech stocks that have witnessed a pullback and are looking attractive bets. 

Lightspeed POS

Lightspeed POS (TSX:LSPD)(NYSE:LSPD) stock witnessed strong selling and is down about 33% in the last 10 days. I believe the selloff in Lightspeed presents an excellent opportunity for investors to invest in a high-growth and fundamentally strong company. 

Lightspeed witnessed an acceleration in demand for its digital products and services amid the pandemic. However, with the easing of lockdown measures and economic reopening, the demand for its products and services could normalize. Further, it faces tough year-over-year comparisons. 

Despite the normalization in demand, I believe the ongoing shift toward the omnichannel payment platform could continue to drive Lightspeed’s revenues and customer base. Besides, its accretive acquisitions, growing scale, and geographic expansion are likely to accelerate its growth and support the uptrend in its stock. Lightspeed stock is also expected to benefit from its growing average revenue per user, innovation, and up-selling initiatives.     

Shopify 

Like Lightspeed, Shopify (TSX:SHOP)(NYSE:SHOP) stock has also witnessed increased selling and has corrected by about 22% in the past 10 days. Notably, during the most recent quarter, Shopify said that it expects the vaccination and reopening of the economy to drive some of the consumer spending back to offline retail and services. Further, Shopify expects the pace of shift toward the e-commerce platform to return to the normal levels in 2021, which accelerated in 2020.

Despite the normalization in the pace of growth, a strong secular shift towards online commerce could continue to bring ample growth opportunities for Shopify, and the recent correction in its stock can be seen as a good buying opportunity. 

Shopify’s initiatives to ramp up its fulfillment network, international expansion and growing adoption of its payment platform are likely to drive strong growth in revenues and GMVs. Moreover, its strong new sales and marketing channels bode well for future growth. I remain upbeat on Shopify’s growth prospects and expect the company to continue to multiply investors’ wealth with each passing year. 

Docebo 

Docebo (TSX:DCBO)(NASDAQ:DCBO) stock is down about 21% in the last 10 days despite sustained momentum in its base business. The enterprise learning platform provider’s key performance metrics remain strong, implying that investors should capitalize on its low stock price and start accumulating its stock at the current levels. 

Docebo’s annual recurring revenue or ARR (a measure of future revenues) continues to grow at a brisk pace. Its ARR is expected to mark 55-57% growth in Q4. Meanwhile, its top line could increase by 48-52% during the same period. The company’s average contract value is growing at a healthy rate and is likely to increase by 22-24% during Q4. 

With the continued expansion of its customer base, geographical expansion, innovation, and opportunistic acquisitions, Docebo could deliver strong returns in 2021 and beyond.

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Manitoba to invest $6.5 million in new systems

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WINNIPEG – The province of Manitoba is investing $6.5 million over three years to replace technical systems used in healthcare facilities, including replacing current voice dictation and transcription services with more modern systems and upgrading the Provincial Health Contact Centre (PHCC)’s triage, call-recording and telephone systems, Health and Seniors Care Minister Heather Stefanson (pictured) announced.

“Our government is investing in the proper maintenance of information and communications technology to ensure digital health information can be safely stored and shared as needed,” said Stefanson. “These systems will ensure healthcare facilities can continue to provide high-quality services and allow Manitobans to get faster access to healthcare resources and information.”

Dictation, transcription and voice-recognition services are used by healthcare providers to write reports. There are currently approximately 80 healthcare sites across Manitoba using some combination of dictation, transcription and voice-recognition services. Many of these systems are nearing the end of their usable lifespans.

“Across our health system, radiologists and nuclear medicine physicians use voice-dictation services to help create diagnostic reports when reading imaging studies like ultrasound, nuclear medicine studies, X-rays, angiography, MRI and CT scans,” said Dr. Marco Essig, provincial specialty lead, diagnostic imaging, Shared Health. “Enhanced dictation and voice-recognition services will enable us to work more efficiently and provide healthcare providers with quicker access to these reports that support the diagnoses and treatment of Manitobans every day.”

The project will replace telephone-based dictation and transcription with voice-recognition functions, upgrade voice-recognition services for diagnostic imaging and enhance voice-recognition tools for mobile devices.

“Investing in more modern voice-transcription services will help our health-care workers do the administrative part of their jobs more quickly and effectively so they can get back to the most important part of their work – providing top-level healthcare and protecting Manitobans,” said Stefanson. “The transition to the new system will be made seamlessly so that services disruptions, which can lead to patient care safety risks, will not occur.”

The new systems will be compatible with other existing systems, will decrease turnaround times to improve patient care and will be standardized across the province to reduce ongoing costs and allow regional facilities to share resources as needed, Stefanson added.

The PHCC is a one-stop shop for incoming and outgoing citizen contact and supports programs such as Health Links–Info Santé, TeleCARE TeleSOINS and After-Hours Physician Access, as well as after-hours support services to public health, medical officers of health, home care and Manitoba Families.

The current vendor that supplies communications support to the PHCC is no longer providing service, making it an opportune time to invest in an upgraded system that will provide better service to Manitobans, the minister said, adding the project will provide the required systems and network infrastructure to continue providing essential services now and for the near future.

“The PHCC makes more than 650,000 customer service calls to Manitobans per year to a broad spectrum of clients with varied health issues. This reduces the need for people to visit a physician, urgent care or emergency departments,” said Stefanson. “The upgrade will also allow Manitobans in many communities to continue accessing the support they need from their home or local health centre, reducing the need for unnecessary travel.”

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Telus and UHN deliver services to the marginalized

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Telus’s Health for Good program has launched the latest of its specially equipped vans to provide medical services to the homeless and underserved, this time to the population of Toronto’s west end. The project relies not only on the hardware and software – the vans and technology – but on the care delivered by trained and socially sensitive medical professionals.

For the Toronto project, those professionals are working at the University Health Network’s Social Medicine program and the Parkdale Queen West Community Health Centre. The city’s Parkdale community, in the west end, has a high concentration of homeless and marginalized people.

First launched in 2014, Telus’s Health for Good program has delivered mobile clinics to 13 Canadian cities, from Victoria to Halifax. Originally designed to deliver primary care, the program pivoted to meet the needs of patients in the COVID-19 pandemic, said Nimtaz Kanji, Calgary-based director of Telus Social Purpose Programs.

Angela Robertson of the Parkdale Queen West Community Health Centre (CHC) asserted that marginalized people are particularly susceptible to the spread of COVID-19, as they don’t have access to the basic precautions that prevent its spread.

The clinic is located near a Pizza Pizza franchise; homeless people shelter under its overhang on the weekends, she said. Some have encampments under nearby bridges.

“The public health guidelines and requirements call for things that individuals who are homeless don’t have,” Robertson said. “If the response calls for isolation, that suggests people have places to isolate in.”

And in the shelter system, pre-COVID, the environment was very congregate, with many people in the same physical space, said Robertson. Some homeless persons, in order to keep themselves safe, have created encampments, and the city has opened up some hotel rooms across the city to create spaces for physical distancing.

Even proper hand-washing and hygiene becomes a challenge for the homeless.

“COVID calls for individuals to practice constant hand-washing. Oftentimes, individuals who are homeless use public washroom facilities that may be in restaurants or coffee shops, and many of those spaces are now closed. So there are limitations to accessing those facilities. It’s not like they’re in a community where there are public hand-washing facilities for people who are homeless.”

The mobile health clinic allows the CHC to take “pop-up testing” into communities where there is high positivity and where additional COVID testing is needed. The CHC can take testing into congregate sites and congregate housing to provide more testing, Robertson said.

“The other piece that we will use the van to do is, when the vaccine supply gets back online, and when the health system gets to doing community vaccinations … we hope that we can be part of that effort.”

COVID has contributed to a spike in cases of Toronto’s other pandemic: opioid overdoses. Some community members are reluctant to seek care because of the stigma attached to substance abuse; and COVID has a one-two punch for users.

The first rule of substance abuse is, don’t use alone; always be with someone who can respond to a potential overdose, ideally someone who can administer Nalaxone to reverse the effects of the overdose, Robertson said. “It’s substance abuse 101,” and the need for social distancing makes this impossible.

Secondly, COVID has affected the supply chain of street drugs. As a result, they’re being mixed increasingly with “toxic” impurities like Fentanyl that can be deadly.

The van itself is a Mercedes Sprinter, modified by architectural firm éKM architecture et aménagement and builder Zone Technologie, both based in Montréal. According to Car and Driver magazine, the Sprinter line – with 21 cargo models and 10 passenger versions – is “considered by many to be the king of cargo and passenger vans.”

Kanji said the platform was chosen for its reputation for reliability and robustness.

While the configuration is customized for each mobile clinic, it generally consists of two sections: A practitioner’s workstation and a more spacious and private examination room, so patients can receive treatment with privacy and dignity, Kanji said. The Parkdale clinic is 92 square feet.

“While the layouts vary across regions, they typically include an examination table and health practitioners’ workstation, including equipment necessary to provide primary healthcare,” the Telus vice-president of provider solutions wrote in an e-mail interview. The Parkdale Queen West mobile clinic is designed for primary medical services, including wound care, mobile COVID-19 testing and vaccination efforts, harm reduction services, mental healthcare and counseling.

The clinic equipped with an electronic medical record (EMR) from TELUS Health and TELUS LTE Wi-Fi network technology.

Practitioners will be able to collect and store patient data, examine a patient’s results over time, and provide better continuity of care to those marginalized citizens who often would have had undocumented medical histories.

The EMR system is Telus Health’s PS Suite (formerly Practice Solutions). It is an easy-to-use, customizable solution for general and specialty practices that captures, organizes, and displays patient information in a user-friendly way. The solution allows for the electronic management of patient charts and scheduling, receipt of labs and hospital reports directly into the EMR, and personalization of workflows with customizable templates, toolbars, and encounter assistants.

But like others tested for COVID, it’s a 24-48 hour wait for results. Pop-up or not, how does the mobile team get results to patients who have no fixed address?

The CHC set up a centre for testing in a tent at the Waterfront Community Centre. Swabs are sent to the lab. “We are responsible for connecting back with community members and their results,” Robertson said.

“This is the value of having Parkdale Queen West being in front of the testing, because many of the community members who are homeless we know through our other services, and there is some trust in folks either coming to us to make arrangements to collect their results, or we know where they are.”

This is a key element of the program, said Kanji – leveraging community trust. In Vancouver downtown east side, for example, where there is a high concentration of marginalized members of the indigenous community, nurse practitioners are accompanied by native elders in a partnership with the Kilala Lelum Health Centre.

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